The Legal Scoop on Southwest Florida Real Estatehttps://www.legalscoopswflre.com
Tue, 16 Jan 2018 08:00:24 +0000en-UShourly1https://wordpress.org/?v=4.9.4https://legalscoop.lexblogplatform.com/wp-content/uploads/sites/74/2016/03/cropped-favicon-round-32x32.pngThe Legal Scoop on Southwest Florida Real Estatehttps://www.legalscoopswflre.com
3232Appeals Court Hands Down a Win for Florida HOAhttps://www.legalscoopswflre.com/hoa/appeals-court-hands-down-a-win-for-florida-hoa/
https://www.legalscoopswflre.com/hoa/appeals-court-hands-down-a-win-for-florida-hoa/#respondTue, 16 Jan 2018 08:00:24 +0000https://www.legalscoopswflre.com/?p=2331Continue reading...]]>Victorville West Limited Partnership (“Victorville”) purchased the Inverrary Golf Course and Clubhouse within the Inverrary community in Lauderhill, Florida, in 2006. Victorville acquired the property subject to a restrictive covenant that became the subject of a lawsuit that the Fourth DCA recently ruled could not be canceled because it remained a substantial benefit to the surrounding homeowners.

Restrictive Covenants

When a person or entity purchases property, the property may be subject to a restrictive covenant that limits the purchaser’s use. The most common example is the restrictions provided by the declaration of covenants, restrictions, and easements that a homeowner’s association enforces within a residential neighborhood.

In this case, Victorville bought the Inverrary Golf Course and Clubhouse subject to a restrictive covenant that stated:

…when at any time [the Golf Course] has a roster of Fifteen Hundred Golf Memberships…it will not at any such time offer, sell, or admit to golf membership any persons or families not then bona fide residents of Inverrary.”

Substantial Change in Circumstance

After Victorville purchased the golf course, they attempted to negotiate with the local HOA to relieve their property from the restrictive covenant. When the association refused, Victorville filed suit against the HOA alleging economic hardship and sought to cancel the covenant because the golf course was no longer profitable. Victorville maintained that there had been a substantial change in circumstances such that the covenant’s purpose could no longer be accomplished.

The Fourth District Court of Appeals framed the issue as for whether or not a property owner could cancel a restrictive covenant when the covenant has become too financially onerous.

The Decision

To decide the case, the Fourth DCA had to determine whether the covenant remained beneficial to the dominant estate holders. In the ruling against Victorville, the court stated that the golf course continues to benefit the “dominant estate” (in this case, the HOA) and the surrounding residential properties, even though few Inverrary residents have memberships to the golf course. Victorville West Limited Partnership v. The Inverrary Association, Inc., 42 Fla. L. Weekly D1860 (Fla. 4th DCA August 23, 2017).

Victorville argued that the covenant contemplated a bilateral relationship whereby members of the community received memberships in the club and, in return, the club provided the facilities. The Court ignored this argument and found that nothing within the covenant that showed its intent was for the golf course to be profitable.

With this decision, the Court concluded that the covenant could not be canceled because it remained a substantial benefit to the surrounding homeowners. The Court ruled against Victorville stating:

Victorville’s financial hardships do not support cancellation of the covenants because ‘the law does not permit cancellation of property restrictions for the purpose of accommodating the best or most profitable use of a particular piece of property affected by the restriction.’”

Victorville also argued that the covenant constituted an unreasonable restraint on alienation because obtaining a two-thirds vote from the association was virtually impossible. The Court ruled that because a two-thirds vote was theoretically possible, the covenant did not amount to an unreasonable restraint on alienation.

Takeaway

Whether a court will cancel a restrictive covenant based on substantial change in circumstance is decided by looking at whether or not the covenant is valid on the basis of the original intention of the parties and whether that original intention can be carried out despite substantially changed circumstances. Essenson v. Polo Club Assocs., 688 So. 2d 981, 984 (Fla. 2d DCA 1997). Said another way, does the covenant still do what the original parties intended?

In this case, the covenant’s purpose was for the benefit of the surrounding community and, as a result, had nothing to do with the profitability of the golf course. From this case, we can determine that courts are going to hold for covenants and precedent over the profitability of business.

]]>https://www.legalscoopswflre.com/hoa/appeals-court-hands-down-a-win-for-florida-hoa/feed/0Tax Cuts and Jobs Act: The Effect on Homeownershttps://www.legalscoopswflre.com/property-tax/tax-cuts-and-jobs-act-the-effect-on-homeowners/
https://www.legalscoopswflre.com/property-tax/tax-cuts-and-jobs-act-the-effect-on-homeowners/#respondThu, 11 Jan 2018 08:00:18 +0000https://www.legalscoopswflre.com/?p=2324Continue reading...]]>On December 20th, 2017, President Trump stood outside the White House and announced that Congress had passed the Tax Cuts and Jobs Act (“Tax Act”), the most thorough overhaul of the federal tax code since the Reagan administration. Like American taxpayers everywhere, most Floridians are wondering:

How will this tax legislation affect me?”

Because the most significant investment for most Americans is their home, this blog post explores how the legislation will affect home-owning taxpayers.

Capital Gains Tax on Primary Residences

One of the main concerns of home-owning taxpayers regarding the tax overhaul was whether Congress would alter the current tax treatment of capital gains taxes on the sale of primary residences. In many instances, the IRS treats the gain from real estate transactions, such as the sale of a vacation home, as taxable capital gains income. However, § 121 of the Internal Revenue Code provides an exception that exempts from taxable income up to $250,000 in capital gains for homeowners selling their primary residence. Much to the relief of homeowners and the homebuilders’ lobby, Congress did not change this provision.

Mortgage Interest and Property Tax Deduction

While Congress did not change the capital gains treatment of the sale of primary residences, Congress did make two notable changes affecting popular deductions for property taxes and mortgage interest. First, with respect to the mortgage interest deduction, Congress amended § 163(h)(3) of the Internal Revenue Code to reduce the amount of borrowed money used to purchase a home (mortgage debt or “acquisition indebtedness”) on which homeowners can deduct the interest from income.

Under the previous tax rules, homeowners could deduct from income the interest paid on the first $1,000,000 in acquisition indebtedness ($500,000 if married filing separately). The Tax Act lowered to $750,000 the amount of acquisition indebtedness on which interest deductions are allowed ($375,000 if married filing separately). It is important to note that mortgage debt incurred before December 15, 2017, is grandfathered in under the older $1,000,000 limitation. Also grandfathered in under the $1,000,000 limitation are taxpayers who had signed contracts on or before December 15, 2017, to close on the purchase of a primary residence before January 1, 2018, so long as the purchase is actually closed before April 1, 2018.

Second, Congress placed a cap on the amount of state and local income taxes and property taxes that taxpayers can deduct on their federal tax returns. Under the previous tax rules, taxpayers could deduct from their income unlimited amounts of state and local income taxes, state and local real property taxes, and state and local personal property taxes paid in the taxable year. The Tax Act amends § 164 of the Internal Revenue Code by reducing the amount of state and local taxes taxpayers can deduct from income to the first $10,000 in state and local income and property taxes ($5,000 if married filing separately). This change represents a significant adjustment and most significantly affects taxpayers in high income-tax states. Fortunately, we have no state income taxes in Florida. However, the $10,000 limitation on deduction of property taxes will still affect Florida homeowners paying property taxes above that amount.

Takeaway

Beginning in 2018, many taxpayers, but not all, will start to see federal income tax relief and lower federal income tax bills. However, while the Tax Act changes provisions that benefit some taxpayers, some changes in the Tax Act will be detrimental to other taxpayers. To know more about how the Tax Act will affect you, you should consult with a tax professional. If you have any questions regarding the Tax Cuts and Jobs Act and its effects, please contact Caleb Hinton at caleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

]]>https://www.legalscoopswflre.com/property-tax/tax-cuts-and-jobs-act-the-effect-on-homeowners/feed/0Tax Increases: Collier County Takes Bold Steps for 2018https://www.legalscoopswflre.com/collier-county/tax-increases-collier-county-takes-bold-steps-for-2018/
https://www.legalscoopswflre.com/collier-county/tax-increases-collier-county-takes-bold-steps-for-2018/#respondWed, 10 Jan 2018 08:00:08 +0000https://www.legalscoopswflre.com/?p=2319Continue reading...]]>In staunchly conservative Collier County, Florida, tax increases are rarely popular. But when the increases are to the bed tax (a.k.a. tourist development tax) and the sales tax, the impact is a little easier to digest. This is mainly because, as compared to tax increases on real property, the bed tax and sales tax do not have uniform impact on owners of real property.

to diversify the county’s economy through adoption of a bed tax increase;

to address overdue improvements to infrastructure via a 2018 voter referendum that would increase the County’s sales tax by 1%; and,

to solicit input on potential creation of a stormwater utility.

Bed Tax Increase

In mid-2017, Commissioners unanimously approved an increase in the bed tax from 4 to 5 cents per dollar, effective in September 2017. This tax, which is part of the County’s overall plan for tourism, will be used mainly to finance a sports complex, which has an estimated cost of around $60 million. This increase is expected to bring in around $5.25 million per year in additional tax revenue. In the event that collected taxes exceed debt service for the sports complex (as is expected), the excess can be used to fund museums, renourish beaches, and promote tourism.

Sales Tax Increase

In November 2018, Collier voters will vote on a 1% increase in the local sales tax to fund infrastructure improvements. For example, a $1 item at Dollar Tree that costs $1.06 today with sales tax, would cost $1.07 with sales tax if this measure is approved. The proposed tax increase is to finance overdue infrastructure improvements in the County, many of which were postponed during the financial crisis. The tax increase would not apply to food or medicine, and is limited to the first $5,000 of purchase of a single item (like a car).

Stormwater Utility Creation?

While not technically a “tax,” the County has engaged a consultant (Stantec) to assess the creation of a stormwater utility, hold public workshops, and solicit public input. Workshops were held late in 2017, and details of implementation are not yet complete. If created, it is likely that the utility will be funded by some form of special assessment or fee. The idea has been suggested before, and has been successfully implemented in many other jurisdictions throughout Florida. In Collier County, however, previous efforts to create a stormwater utility have been unsuccessful. This time around, the impact of recent storms and heavy localized flooding make this a real possibility in Collier County.

The bed tax increase has already been adopted, and the County has already begun collecting revenue generated from the increase. The 1% sales tax increase will likely face the County electorate in November 2018. And it remains to be seen whether there will be a new stormwater utility in Collier County, and if so, how it will be funded. Stay tuned for additional updates.

]]>https://www.legalscoopswflre.com/collier-county/tax-increases-collier-county-takes-bold-steps-for-2018/feed/0Business Rent Tax Reduced Beginning January 1, 2018https://www.legalscoopswflre.com/tax/business-rent-tax-reduced-beginning-january-1-2018/
https://www.legalscoopswflre.com/tax/business-rent-tax-reduced-beginning-january-1-2018/#respondWed, 20 Dec 2017 08:00:51 +0000https://www.legalscoopswflre.com/?p=2313Continue reading...]]>The Florida Legislature recently delivered a small win for the business community with Florida House Bill 7109. Effective January 1, 2018, Florida Statute 212.031(1)(c) is amended by lowering the sales tax levied against commercial tenants from 6% to 5.8%. A more significant decrease would have been better, but commercial tenants will take what they can get, we suspect. The tax – known as the Business Rent Tax or “the BRT” – affects commercial tenants including retail, office space, and industrial tenants.

What is the BRT?

The Florida Legislature enacted the BRT in 1969, declaring that the business of renting, leasing, letting or granting a license for the use of commercial real property is a “taxable privilege.” In part because Florida has no personal income tax, the state government relies on sales taxes, including the BRT, as a significant source of revenue. Many local governments also impose a local option sales tax on top of the state BRT.

Florida is the only state to levy a statewide tax against commercial tenants, and thereby creates a competitive disadvantage for Florida businesses that lease rather than own their commercial space.

House Bill 7109

Florida’s BRT is unique from a national perspective in two respects: not only is it the only standard, statewide sales tax on commercial real estate rents, but unlike other corporate taxes, it is not pegged to profitability. As a result, the BRT significantly raises occupancy costs on all commercial tenants, regardless of their financial condition. New and/or struggling businesses in Florida may have the greatest difficulty with the burden this tax creates, and these businesses are likely to benefit the most from the tax relief in House Bill 7109.

Takeaway

Many voices within Florida’s business community have pushed for years for steep cuts to the BRT and, beginning in 2018, start to see their lobbying efforts bear fruit. Considering the significant impact the tax has on occupancy costs, the BRT should continue to be the subject of considerable debate in Tallahassee. As with all tax matters, please consult with your tax professional. If you have answer questions regarding the Business Rent Tax reduction and its effects, please contact Caleb Hinton atcaleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

]]>https://www.legalscoopswflre.com/tax/business-rent-tax-reduced-beginning-january-1-2018/feed/0Naples Chamber Discusses “After Irma: The Outlook for Small Business in Collier County”https://www.legalscoopswflre.com/collier-county/naples-chamber-discusses-after-irma-the-outlook-for-small-business-in-collier-county/
https://www.legalscoopswflre.com/collier-county/naples-chamber-discusses-after-irma-the-outlook-for-small-business-in-collier-county/#respondTue, 21 Nov 2017 13:53:54 +0000https://www.legalscoopswflre.com/?p=2307Continue reading...]]>Last week on Wednesday, November 15th, the Greater Naples Chamber of Commerce hosted a panel of local business and government leaders, to discuss “After Irma: The Outlook for Small Business in Collier County.” Panelists included Michael Wynn, President of Sunshine ACE Hardware; Blake Gable, CEO of Barron Collier Companies; Jody Hudgins, Senior Vice President at First Florida Integrity Bank; Leo Ochs, Collier County Manager; and Marshall Goodman, President and CEO of Naples Accelerator.

Themes

After an introduction by Bill Barker, President of the Naples Daily News, the panelists discussed the status of business in Collier County following Hurricane Irma which focused on three themes:

County’s storm response: All panelists expressed gratitude to Mr. Ochs for the great work of the County staff and the County’ exemplary storm preparation and response.

Environment for small business: Both before and after the storm, Collier County has been investing in citizen-accessible “economic incubators” and other methods to accelerate the success of small business.

Optimistic outlook: After the biggest storm to hit the Naples area in over 50 years, the small business community is poised to continue the pre-storm momentum and economic recovery.

Lessons from the Panelists

Michael Wynn. Odds are stacked against small businesses and challenges are constantly evolving. Despite the hurricane and despite the “Amazon effect” and trend toward consolidation, Mr. Wynn made it clear that retail is not dead. He stressed the importance of social media during a major storm and for general knowledge of a customer base. Small businesses may not be able to compete with Amazon’s product selection, but they can deliver products and use data to hone in on their customer base and product preferences.

Blake Gable. Mr. Gable explained that Hurricane Irma hit small retail businesses particularly hard and recovery will be an ongoing challenge. One month of lost business can devastate a “Mom and Pop” business. Both commercial and residential real estate markets are making a steady comeback. While Irma hit all sectors in September, signs point to a recovery to healthy pre-storm levels for both commercial and residential real estate.

Jody Hudgins. Mr. Hudgins stressed the importance of having a good relationship with your banker. He also urged that, in times of trouble, standby letters of credit are very important to have (particularly for unexpected surges in overtime expenses and supplies). Mr. Hudgins also indicated that disaster recovery loans have been an important part of the post-storm lending environment.

Leo Ochs. Mr. Ochs received accolades from fellow panelists on the County’s storm preparation and response. He indicated that the County is undergoing an “after action review” of the storm. Mr. Ochs also mentioned that the Board of County Commissioners may be considering policies such as a requirement for actual generators at gas stations and the need for backup generators at County utility stations.

Marshall Goodman. Mr. Goodman has a background in Silicon Valley and uses his background to help small businesses get up and running. He shared stories about the unique businesses that have come through his accelator program and the combination of retirees and opportunities that make Collier County unique.

The Future Looks Bright

Many small businesses are still reeling from the unexpected costs and lost revenue associated with the storm. Despite being directly hit by the most powerful hurricane to hit the area in over fifty years, Collier County is quickly recovering from the storm. The general mood among the panel was optimistic. Lessons learned from Irma will hopefully make the small business community even stronger than before the storm.

Photo Courtesy of Gail Lamarche

]]>https://www.legalscoopswflre.com/collier-county/naples-chamber-discusses-after-irma-the-outlook-for-small-business-in-collier-county/feed/0Conservancy Hosts Event on Fracking and Pushes for Ban in 2018https://www.legalscoopswflre.com/land-use/conservancy-hosts-event-on-fracking-and-pushes-for-ban-in-2018/
https://www.legalscoopswflre.com/land-use/conservancy-hosts-event-on-fracking-and-pushes-for-ban-in-2018/#respondTue, 14 Nov 2017 08:00:37 +0000https://www.legalscoopswflre.com/?p=2300Continue reading...]]>Last week, the Conservancy of Southwest Florida hosted Cornell University Professor Dr. Tony Ingraffea, as part of its “Evenings with the Conservancy” series who spoke on the “Effects of Unconventional Drilling” on November 8.

Oil & Gas in Southwest Florida

The evening began with an introductory presentation by Nicole Johnson, Director of Environmental Policy at the Conservancy, including a brief history of the oil and gas (mainly oil) industry in Southwest Florida. Oil wells have existed in Southwest Florida since the 1940s, but the industry has not thrived here like it has in other areas, such as the western United States.

The Collier Controversy

The Conservancy played a prominent role in recent controversies involving “alternate extraction” techniques in Collier County in 2013 and 2015. These controversies arose from use of fracking and unconventional extraction techniques at the Hogan Well in eastern Collier County, and resulted in increased public awareness of potential environmental concerns relating to fracking. The Conservancy has identified banning alternate extraction techniques as their #1 priority during the 2018 legislative session.

2018 Bills: H.B. 237/S.B. 462

The Conservancy is encouraging support of Florida H.B. 237, and its companion S.B. 462. If enacted in their present form, all forms of “advanced well stimulation treatment” (including fracking) would be prohibited in Florida.

On November 9th, S.B. 834 was introduced, and would impose penalties of $50,000 per incident on anyone who approves or engages in “extreme well stimulation” (including fracking).

Presentation by Dr. Tony Ingraffea

Dr. Ingraffea is an accomplished scientist who has studied and written about the subject for many years. He presented statistics on Florida’s historical oil and gas production relative to other states; use of solar power in the Sunshine State; and information about methane and CO2 (greenhouse gas) releases from oil and gas operations. Dr. Ingraffea also provided information on countries, states, provinces, and cities and counties that have banned fracking, including:

In Florida, 40 counties (of 67) and 52 cities have either banned fracking outright, or have passed resolutions opposing it. Collier County has not taken any formal action.

Florida’s oil production peaked in 1978, when production reached 4 million barrels/month.

Today there are around 60 producing oil and gas wells in Florida, and they produce around 150,000 barrels/month.

Every day, the United States consumes around 20 million barrels/day.

Dr. Ingraffea alluded to the United States’ plan to withdraw from the Paris Agreement in his discussion of greenhouse gas emissions, and provided some alarming statistics and projections.

Dr. Ingraffea concluded with a picture of Southwest Florida completely submerged, and he cautioned that Southwest Florida could be under water by 2022 (in five years), if the greenhouse gases and methane from oil and gas production remain on their present course. Amid gasps (and some giggles) from the crowd, he emphasized “these are only projections.”

Takings/Bert Harris Act

The arguments for conservation are compelling and sincere. However, regulation of resources involves striking a balance among competing interest holders. Because of this, in banning extraction techniques, the legislature would be wise to consider potential impacts to mineral rights holders. Failure to do so could lead to takings and Bert Harris Act lawsuits, and the possibility of indeterminable, potentially enormous, liability exposure for state and local governments in Florida.

If you have any questions regarding fracking or land use in Southwest Florida, please feel free to contact me at jeff.wright@henlaw.com or by phone at 239-344-1371.

Your neighbors are proud of their beautiful, large fruit trees, which are now growing substantially over your property. The trees have grown so large that a number of branches extend over your house, tool shed, and other improvements, which you believe results in a dangerous condition, not to mention rotten fruit dropping on your patio. What are your options: force the neighbor to remove the tree extending over your land, sue for damages, or something else? You may be surprised.

Is Your Neighbor Legally Responsible?

In Florida, a possessor of land is not liable to others outside his land for nuisance caused by vegetation growing from his land over adjoining properties. Scott v McCarty, 41 So. 3d 989 (Fla.4th DCA 2010). Therefore, your neighbor has no duty to remove or even trim the tree branches that encroach onto your property.

However, as the adjoining property owner, you have the privilege to trim back, at your expense, the offending (encroaching) tree, roots, branches, and other vegetation. Gallo v Heller, 512, So. 2d 215 (Fla.3d DCA 1987). Maybe this does not seem fair. You may wonder why you must pay to cut your neighbor’s trees that she allowed to grow over your property. The rationale appears to be grounded in common sense and public policy. Courts recognize that allowing such a claim would likely result in innumerable, and in many instances, vexatious lawsuits. In fact, one case reasoned that departing from the precedent would invite further litigation between neighbors, which as a matter of public policy should be avoided. Scott v McCarty, 41 So. 3d 989 (2010)

Options

If your neighbor’s tree is growing onto your property, as a general rule you may trim the vegetation that extends onto your property. However, you should not cut any portion of the tree on your neighbor’s property and should not enter onto your neighbor’s property without consent. In fact, you should chat with your neighbor first and discuss what you intend to do. Even if your neighbor disagrees, and the matter ends up in a courtroom, a judge is likely to look favorably on your attempt to amicably resolve your disagreement.

Exceptions

Of course, there are exceptions to most general rules. In Sullivan v Silver Palm Properties, Inc., 558 So. 2d 409 (Fla. 1990), the Florida Supreme Court cites at least two cases which held a landowner responsible for maintenance of trees and vegetation obstructing motorists’ view of a stop sign. The Courts reasoned that overhanging vegetation which blocks traffic control devices presents an imminent danger, and that a duty to remove vegetation obstructing critical traffic control signage is common sense. Also, the general rule in Florida of no duty or liability of a neighbor for overgrown trees is not the rule followed in all states.

Other matters to consider before taking action may include:

review municipal or county ordinances, if applicable;

investigate and consider the possibility of removal of vegetation on your property causing damage to your neighbor’s property; and

use common sense.

These types of claims can be fact driven and varying facts may affect an outcome in court. If in doubt, be sure to seek a competent attorney to assist you. If you have any questions or concerns regarding this issue, please feel free to reach me at donald.thomson@henlaw.com or by phone at 239-344-1369.

]]>https://www.legalscoopswflre.com/real-estate/are-your-neighbors-trees-growing-on-your-property/feed/0Meet the Appraiser: Matt Simmonshttps://www.legalscoopswflre.com/eminent-domain/meet-the-appraiser-matt-simmons/
https://www.legalscoopswflre.com/eminent-domain/meet-the-appraiser-matt-simmons/#respondWed, 04 Oct 2017 07:00:35 +0000http://www.legalscoopswflre.com/?p=2291Continue reading...]]>If you’re a regular reader of this blog (and I hope you are, or will become one!), you will know that many of my posts, over the years, have to do with property rights. An important component of property rights is valuation of the property right taken, or at stake. Today, as part of my series with local appraisers, I am interviewing Matt Simmons, an appraiser and principal with the firm of Maxwell, Hendry & Simmons, LLC.

Carlos: What do appraisers do?

Matt: At the core, we value the bundle of rights inherent in real property. We typically determine the value through application of one or more commonly accepted approaches to value: the Sales Comparison, Cost, or Income approach. But within each approach the nuance of the overall rights remains the value driver. The acronym DUE encompasses the fundamental rights most fee simple real property possesses. These are the rights of disposition, use, and exclusion. When an action (governmental or otherwise) impacts one of these rights, the value of the property is almost always impacted.

Carlos: What made you want to become an appraiser?

Matt: Like many professionals, I was introduced to the profession through a friend. I began working in appraisal data entry when I was 19 and gained my initial trainees license the following year. I’ve always had an interest in real estate and the opportunity to analyze properties, solve complex valuation issues, and build a real estate centered business is incredibly rewarding.

Carlos: How do you work with attorneys in property rights cases?

Matt: We talked before about the fundamental rights (DUE) in real property. Often, we’re retained by attorneys to determine the value loss (diminution) caused by a loss of some or all of these rights. And it’s more common than you might think. An eminent domain action relative to a road widening or utilities project is probably the most commonly known instance. But changes in zoning, land use, variances granted to neighbors, floodways, or building code amendments are all circumstances where we’ve been retained by an attorney to evaluate the value impact due to a loss or reduction of property rights.

Carlos: What are cap rates and how do they figure in a valuation analysis?

Matt: Capitalization rates are really just an expression of the relationship between a sales price (SP) and net operating income (NOI), expressed as NOI/SP. So a property that has a sales price of $500,000 and has an annual net operating income of $50,000 would have a 10% cap rate. The cap rate is really a way of telling how much an investor is willing to pay for a particular stream of income. Lower cap rates are associated with properties that are perceived to have less risk. These include nationally recognized tenants with stable financials and longer terms leases. Recently, properties in this category have sold with 4-5% cap rates. While this is a seemingly low return on an investment, the rate is an acknowledgement that there is a low level of risk associated with it. In contract, properties with high cap rates are perceived to contain a higher degree of risk. Cap rates come into play for an appraiser by making sure you understand how a property would be viewed by a prospective buyer and what rate they would associate with the property.

Carlos: What valuation trends have you seen over the last six months in the vacant land market in Lee County?

Matt: There have been a number of acquisitions of vacant sites that are suitable for medium to large scale development. Prices have continued to rise on a ‘per acre’ or ‘per unit’ basis and developers have been particularly interested in finding sites suitable for multi-family development. We’ve also seen a number of marginal, infill, and environmentally challenged properties trade hands. This is a sign that our market is continuing to grow and mature. The ‘easy’ properties are mostly gone at this point and developers have to be more creative in looking for opportunities.

As you can see, property value is an integral part of the property rights framework. This comes directly from the Fifth Amendment to the U.S. Constitution, which requires “just compensation” if private property is taken for public use. Stay tuned for interviews with other local appraisers.

]]>https://www.legalscoopswflre.com/eminent-domain/meet-the-appraiser-matt-simmons/feed/0Homestead, Save Our Homes, and Corrections to Assessed Value: Are You Ready for Your 2017 Property Taxes?https://www.legalscoopswflre.com/property-tax/homestead-save-our-homes-and-corrections-to-assessed-value-are-you-ready-for-your-2017-property-taxes/
https://www.legalscoopswflre.com/property-tax/homestead-save-our-homes-and-corrections-to-assessed-value-are-you-ready-for-your-2017-property-taxes/#respondWed, 16 Aug 2017 07:00:42 +0000http://www.legalscoopswflre.com/?p=2289Continue reading...]]>As of January 1st of 2017, it has been reported that the total value of real property in Lee County increased for the fifth consecutive year to $105.6 billion (nearly 9% higher than 2016 values).

With this year’s Truth in Millage (“TRIM”) Notices just around the corner (typically mailed by the Lee County Property Appraiser in mid-August), one recent legal opinion highlights the nuances of remedies available to the property owner—and the Property Appraiser—in the event assessed values are contested.

Background on Florida’s “Save Our Homes” Doctrine

For real property that has been classified as a “homestead” in Florida, the Save Our Homes provision of Section 193.155(1), Florida Statutes, allows for an annual increase of only 3% in the assessed value of property, or the yearly increase in the Consumer Price Index (CPI), whichever is less. Moreover, under 193.155(2), Florida Statutes, if the capped value exceeds the market value in a given year, the capped value will be reduced to the market value.

Nikolits v. Haney

In Nikolits v. Haney, 42 Fla. L. Weekly D1261 (Fla. 4th DCA May 31, 2017), owners challenged the County Property Appraiser’s 2010 assessed value of $19.7 million for their homestead property. The County’s Value Adjustment Board (VAB) reduced the assessment to $12 million and the Property Appraiser challenged the VAB’s decision in court. After several years in litigation, a final judgment was rendered in 2014 establishing an assessed value of $17.1 million for the property for 2010. Neither party appealed.

During the pendency of the litigation over the 2010 value, the Property Appraiser applied the Save Our Homes 3% cap to the VAB’s value of $12 million, resulting in assessed values of $12.1 million in 2011, $12.5 million in 2012, and $12.7 million in 2013. Once the litigation concluded, the Property Assessor filed Certificates of Correction for 2011 through 2013, recalculating taxes based on the court’s final judgment establishing an assessed value of $17.1 million for 2010. The end result was that the property owner’s taxes increased by over $90,000 for each of the three tax years.

Again, the owner petitioned to the VAB but, this time, the VAB rejected the petitions without a hearing. The owner proceeded to court, arguing that the recalculation of its taxes was not permitted and that the rejection of its petitions to the VAB was improper. The trial sided with the owners, and the Property Appraiser appealed.

On appeal, the Fourth District Court of Appeal ruled that:

the recalculation of the taxes was a permissible correction of a “mathematical” error, but

the rejection of the petitions without a hearing by the VAB was not proper.

Accordingly, on remand, the Property Appraiser was directed to allow the owner to contest the valuations for 2011 through 2013 to the VAB.

What’s the Legal Scoop?

The Fourth District’s recent Nikolits decision illustrates the numerous intricacies of challenging property tax assessments in Florida and the need to be aware of remedies available to both the landowner and the Property Appraiser.

If you have any additional questions about the Nikolits case or general concerns regarding your new TRIM Notice and the local government’s authority to levy ad valorem taxes under Florida law, please do not hesitate to contact our office by dialing (239) 344-1100, or reach me via email at: Austin.Turner@henlaw.com.

]]>https://www.legalscoopswflre.com/property-tax/homestead-save-our-homes-and-corrections-to-assessed-value-are-you-ready-for-your-2017-property-taxes/feed/0A New Set of Tires and the Latest Supreme Court Case on Property Rightshttps://www.legalscoopswflre.com/eminent-domain/a-new-set-of-tires-and-the-latest-supreme-court-case-on-property-rights/
https://www.legalscoopswflre.com/eminent-domain/a-new-set-of-tires-and-the-latest-supreme-court-case-on-property-rights/#respondFri, 28 Jul 2017 07:00:05 +0000http://www.legalscoopswflre.com/?p=2276Continue reading...]]>What do they have in common? Nothing…except that when I was getting a new set of tires put on my car, I had time to read Murr v. Wisconsin, the recent U.S. Supreme Court 40-page decision in a property rights case involving a regulatory takings analysis.

Facts

The facts of the case are pretty simple. The Murrs purchased Lots E and F separately in the 1960s, transferring Lot F to a family plumbing business, but keeping ownership of Lot E in their own names. The Murrs transferred Lot F to their kids in 1994 and Lot E to the kids in 1995. The lots each had less than one acre available for development. The Murr kids brought the lots under common ownership (in other words, the kids owned both lots, unlike the parents, who owned one lot through a company and the other lot as individuals).

Once under common ownership, state and local rules forbidding separate sale or development of the lots came in to play. The Murr kids wanted to sell Lot E as part of an improvement plan for both lots, and requested variances from the local zoning authority. The zoning authority denied the variance request, and the state courts affirmed the denial of the variance request.

While the facts are simple, regulatory takings law is a jumbled mess. As the Supreme Court charitably put it,

This area of the law has been characterized by ‘ad hoc, factual inquiries, designed to allow careful examination and weighing of all the relevant circumstances.’”

In order to decide the Murr case, the majority had to decide what is the property to be considered in the takings analysis. In determining that no taking occurred, the majority announced an involved, multi-factor test. The Murr kids’ decision to take title to both lots was significant in the majority’s analysis.

Although not seriously concerned by the outcome the majority reached, the minority wrote that the majority’s new test actually weakens property rights.

Take-Away

Here’s what you should take away from Murr: the Murr kids’ voluntary conduct, in unifying the two parcels under common ownership and implicating state and local rules barring the lots’ separate sale or development, created a problem. A problem that could have been avoided by taking title to the lots separately instead of under common ownership.